Talecris to expand in Clayton

Plans to invest up to $450 million in plant expansions had been sitting on the shelf at Talecris for at least two years. Following an initial public offering of stock and the sale of notes that raised more than $1 billion for the company in the past month, the RTP-based drugmaker is dusting off the expansion plans.

Talecris will invest $268.7 million in its Clayton plant and create 259 jobs over the next seven years, according to the N.C. Department of Commerce. Up to $4.8 million in state incentives beckon.

The company makes its blood-based medicines in Clayton, where 1,800 of its 2,300 Triangle employees work.

The expansion plans, which are mentioned in Security and Exchange Commission filings, had been on hold after Talecris postponed its IPO and then considered selling itself to a competitor. When the sale ran afoul of U.S. antitrust regulators, the company was able to switch course again and go public Sept. 30.

Duke goes to India to develop clinical therapies

Discoveries by Duke’s medical faculty will be tested and developed in India.

Dr. Victor Dzau, chief executive officer of Duke University Health System, announced in Delhi that the university is teaming up with Jubilant Biosys, an Indian company with operations in Bangalore.

Jubilant is charged with developing a portfolio of four to five clinical therapies, which could be licensed to large drugmakers.

Pfizer to close two R&D centers in RTP area

Following its $67.3 billion acquisition of Wyeth, Pfizer plans to close six research and development centers and cut 15 percent of the jobs held by scientists and lab technicians.

Two former Wyeth R&D centers in Sanford and RTP are among those tagged for closure, which is expected to cost at least 170 local employees their jobs.

RTI gets $70 million contract

College is expensive and about two-thirds of all students who continue their education past high school receive some type of financial aid. This year, the U.S. Department of Education will spend about $116 billion on student financial aid.

The investment reflects how important college degrees are to the economy, the labor pool and the standard of living in the U.S.

But does student financial aid work? What is the taxpayers’ return on the investment?

The U.S. Department of Education has awarded RTI International a $70 million contract to find out.

More information here.

Jury finds GSK negligent

A Philadelphia jury found that GlaxoSmithKline failed to properly warn doctors of birth defect risks the antidepressant Paxil posed when prescribed to pregnant women.

Lyam Kilker was born four years ago with heart defects his mother blamed on Paxil. The lawsuit was the first of about 600 to come to trial. The jury awarded the Kilker family $2.5 million in damages.

The Food and Drug Administration issued warnings in 2005 that Paxil may be associated with birth defects. But GSK argued that in Lyam Kilker’s case it wasn’t clear Paxil caused the heart defects.

GSK said it would appeal the verdict.

In other company news:

• GSK will invest $17 million in a new, $60 million science park that is about to be established near London. The British drugmaker, which has its U.S. headquarters in Research Triangle Park, and two other financial backers hope to attract enough young biotech companies to rival the biotech hub in Boston.
• Sales of Trimeris’ AIDS drug Fuzeon drop 35 percent in the third quarter.
• Two Leerink Swann analysts have Durham’s Inspire Pharmaceuticals on a watch list of five companies whose stock might increase rapidly in value. The analysts are betting that next year Inspire’s dry eye drug Prolacria will finally receive regulatory approval and come to market and that a partner will emerge for Inspire’s cystic fibrosis drug denufosol.
• Talecris Biotherapeutics announced the sale of $550 million in notes two weeks after its initial public offering raised about $900 million. The RTP-based maker of blood-based drugs wants to refinance some of its debt and add to the pool of money available for acquisitions.
• Affiliated Computer Services increased the number of hires at its call center in Raleigh by 150. The Dallas company, which already employs about 2,600 in North Carolina, announced in August an addition of 465 jobs at its Raleigh center.

Money going to companies

A drug-eluting stent that Micell Technologies, a Raleigh company with 10 employees, is working on has captured the interest of St. Jude Medical, a St. Paul, Minn.-based medical device giant with more than 10,000 employees.

St. Jude bought a $15 million stake in Micell to help the small company develop the stent. A special coating on the stent controls the release of drugs to keep diseased coronary arteries from clogging. But unlike other drug-eluting stents, Micell’s product promises to carry a lower risk of causing blood clots.

The stent is in the early stages of development and will require years of additional testing.

In other company news:

• Icagen, a Durham drug development company, renewed its research partnership with pharmaceutical giant Pfizer for one year. The partners are looking for new painkillers. The renewal means Icagen will receive a $5 million payment from Pfizer and will remain eligible to receive up to $359 million in milestone payments and royalties.
• Talecris Biotherapeutics is scheduled to go public Sept. 30 and raise nearly $800 million, excluding fees.

  About two-thirds of the proceeds, or $514.8 million, would go to the Research Triangle Park-based company to pay back loans. The remainder, about $281.5 million, would go to Cerberus, the New York buyout firm that bought the company four years ago for $303.5 million.

  Cerberus financed the deal with about $200 million in loans. A year later, the buyout fund pulled out an $800 million dividend, which brought Talecris’ debt to more than $1 billion.

• GlaxoSmithKline announced it will limit its funding for medical education programs that bring doctors up-to-date to academic medical centers. The drugmaker will stop paying commercial providers at a time when the pharmaceutical industry is under scrutiny for having to much influence on doctors.

Research money

A group of RTP-area universities, research institutes and nonprofit organizations banded together as the Triangle Global Health Consortium to chase a piece of the $63 billion the Obama Administration wants to spend over the next six years to revamp global health programs.

Congress has yet to approve spending the money, but representatives of the Center for Strategic and International Studies’ Global Health Policy Center, a Washington, D.C., think tank, came to RTP to gather ideas that can be presented in a report due next year.

More information here.

Also, the Duke Genome Center received $19.5 million to develop a portable device that detects upper respiratory viruses before they cause symptoms.

Alpha-1 Antitrypsin is made from blood plasma and, taken in proper doses, prevents the damage suffered when the body doesn’t produce enough of the protein. Talecris’ Prolastin is the best selling of three available treatments for Alpha-1 deficiency. CSL, the Australian rival that wants to buy Talecris, makes Zemaira, which is third in sales.

In the antitrust lawsuit the FTC filed a few days ago, the regulators argued that CSL’s takeover of Talecris would create a company that controls 80 percent of worldwide Alpha-1 sales.

The merged company would also own market shares of 42 percent or larger for three other life-saving treatments made from blood plasma – scenarios rife for supply controls aimed at raising prices, according to the lawsuit. But nowhere would CSL gain as much sway as in the Alpha-1 market.

“Ridiculous,” said John Walsh, the founder and president of the Alpha-1 Foundation, a Florida-based nonprofit that funds the search for a cure. “I don’t understand where the FTC is coming from.”

Walsh was diagnosed with Alpha-1 deficiency in 1989 and his health relies on sufficient supplies of the protein. But supply of Alpha-1 has not been an issue for patients since 2003, he argued, the year CSL brought Zemaira to market and Baxter International, the Deerfield, Ill., market leader in blood plasma-based medicines, launched Aralast.

And more options are on the way for the about 10,000 Americans diagnosed with Alpha-1 deficiency.

Three companies are testing experimental treatments for Alpha-1 deficiency in clinical trials to compete with Baxter, CSL and Talecris, according to a pipeline update that will be published in the Alpha-1 News newsletter this week. The most advanced of the three, an Alpha-1 infusion developed by Israeli biotech company Kamada, is awaiting regulatory approval for sale.

Talecris is working on two new versions of Prolastin and two other companies are considering developing treatments to enter the Alpha-1 market, Walsh said.

“We had exhaustive interviews with the FTC,” he added. Regulators were well aware of treatments in the pipeline before they decided to pursue an antitrust lawsuit to block the sale of Talecris.

While it may be debatable how much of an issue supply of Alpha-1 is – FTC spokesman Mitchell Katz countered that any new treatments still have to pass significant regulatory hurdles, which might take a while – price is clearly a concern among regulators and patients. Alpha-1 supplies can cost as much as $90,000 per patient per year, according to the FTC lawsuit.

Regulators are particularly alarmed about signs that Baxter and CSL may already control supplies to keep prices high. In 2006, the U.S. Department of Health and Human Services found supply rationing of immune globulin, one of the three other medicines made from blood plasma, after patients complained they had problems obtaining their medicine, according to the antitrust lawsuit.

The FTC stopped short of accusing any of the companies of price fixing. But the FTC lawsuit does allege signaling, which is the intentional sharing of competitive information to secure accommodating reactions.

According to Walsh, the cost of Prolastin has increased by about one-third, from 32 cents per milligram, since Zemaira and Aralast came to market at more than 50 cents per milligram six years ago.

The Alpha-1 Foundation and its patient outreach arm, the Alpha-1 Association, are very supportive of Baxter, CSL and Talecris. They help recruit for clinical trials and supported faster regulatory approval of Zemaira and Aralast.

But Alpha-1 supplies and prices and the antitrust lawsuit will likely come up at the annual Alpha-1 conference, which starts Friday in San Francisco. About 450 doctors, patients and family members are expected to attend, according to Marlene Erven, executive director of the Alpha-1 Association.

The Federal Trade Commission’s complaint aims to block the $3.1 billion takeover of Talecris Biotherapeutics, a company based in Research Triangle Park and one of the area’s largest drugmakers. Last August, CSL, a larger Austrialian rival, offered to buy Talecris, which employs about 2,100 in the Triangle and operates a large production plant in Clayton.

A review of the effects the merger would have on the remaining suppliers led the FTC to oppose the deal.

Consolidation reduced the number of companies that make blood plasma-based treatments to five, from 13 in 1990, and prices for the drugs have already increased, the complaint alleged. A redacted copy of the complaint blames current market leader Baxter International of Deerfield, Ill., and CSL, with $2.5 billion in annual sales the second largest supplier, but stops short of accusing the two companies of price fixing.

“Suppliers have learned they can maximize profits if each firm does its part to maintain overall industry [redacted] holding back on expanding output to avoid driving prices lower,” the complaint read.

Talecris, which expanded aggressively in the past three years, is the third-largest supplier and the only company able to interfere with Baxter and CSL’s efforts to coordinate supply and price, according to the FDC.

Dr. Brian McNamee, CSL’s chief executive, strongly disagreed with the FTC’s allegation that prices of plasma-based drugs aren’t competitive. “We believe the reverse is true,” McNamee said in a prepared statement. “In fact consumers have benefited by increased output, innovation and lower prices than would otherwise have been the case.”

The four treatments at issue are immune globulin, albumin, Rho-D and alpha-1 antitrypsin. All are disease fighting proteins found in blood plasma, a yellowish fluid. People with certain genetic or immune disorders lack these proteins and rely on  infusions for which no good substitutes exist. Treatments can cost as much as $90,000 per patient per year.

Only a handful of companies worldwide make medicines from blood plasma, a yellowish fluid that contains disease fighting proteins. Baxter International of Deerfield, Ill., is the current market leader, followed by CSL of Australia and Talecris, which is based in Research Triangle Park and employs about 2,100 in the Triangle. A merger of Talecris and CSL would create a new No.1 in the $15 billion industry.

So it came as no surprise when CSL announced Monday that the U.S. Federal Trade Commision will vote on a staff recommendation to block the Talecris deal. The antitrust regulators are expected to announce their decision Thursday.

What is at stake in the deal?

Talecris is CSL’s ticket to gain access to North American and European markets. Talecris’ production plant in Clayton, which employs about 1,500, would become CSL’s only drug making facility in the U.S. And Talecris’ owners – New York buyout firm Cerberus Partners, which also owns U.S. automaker Chrysler, and Ampersand Ventures, a Wellesley, Mass., venture capital firm – could reap about $2 billion.

A CSL takeover would probably lead to job cuts at Talecris’ RTP headquarters. But access to CSL’s ample blood plasma supplies could boost production and create jobs at the Clayton plant, where Talecris has already planned an expansion.

CSL also agreed to assume Talecris’ $1.3 billion in debt.

But a CSL supply agreement that expired at the end of 2008 is not at stake.

Talecris has never disclosed how much of its blood plasma comes from its own collection centers and how much the company has to buy. But analysts have considered CSL a significant supplier. CSL renewed its supply agreement with Talecris effective Jan. 1, Dr. Rachel Carter, a CSL spokeswoman said. And the renewal is good for five years whether the takeover goes through or not.